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Non taxable income in Canada includes lottery winnings of any amount, most gifts and inheritances, the Canada child benefit, most TFSA withdrawals and most life insurance payouts. The CRA lists these as amounts you don’t report and don’t pay tax on. If that’s all you received, your tax bill doesn’t move by a cent.
What counts as non taxable income in Canada?
The CRA keeps a short page called “Amounts that are not reported or taxed”. We read it in September 2026 (it was last updated on 17 September). Here is what’s on it, with the small print that matters.
| Type of money | Condition from the CRA |
|---|---|
| Lottery winnings | Any amount, unless the prize is income from work, a business or property, or a prize for achievement |
| Gifts and inheritances | Most of them |
| Canada Groceries and Essentials Benefit | Plus related provincial and territorial benefits |
| Canada child benefit | Plus related provincial and territorial benefits |
| TFSA withdrawals | Most amounts |
| Life insurance paid after a death | Most policy amounts |
| Strike pay from your union | Most types, even if you picketed |
| Victim compensation | Provincial or territorial, for crime or motor vehicle accidents |
| War veterans’ payments | For disability or death from war service, from Canada or allied countries |
| Quebec family allowance | Including supplements for handicapped children |
| Income exempt under the Indian Act | Section 87 exemption |
The word “most” appears a lot. Each item has exceptions, and a prize, a gift or a payout that comes out of your job, your business or an investment you hold can be treated differently from the plain version in the table, so read the CRA page for your case before you lean on a rule of thumb.
What still gets taxed on non taxable money?
The money itself is free, but what it earns isn’t. The CRA says so directly, and uses lottery winnings as its example.
Income earned on any of the above amounts is taxable. For example, any interest that you earn when you invest lottery winnings must be reported on your return.
Amounts that are not reported or taxed, canada.ca
Here’s a case. You earn $60,000 in Ontario, so your federal and Ontario tax is $9,417 on basic credits. You win $10,000 in a lottery, and your tax stays at $9,417. You put the prize in a savings account paying 4% and earn $400. That interest is taxable and adds about $119, because it lands on the top of your income at roughly 29.65%. Had the $10,000 arrived as extra pay, the added tax would be $2,965.
You can test your own numbers with the income tax calculator, then add the interest to see the difference.
A TFSA avoids even that. Growth inside it isn’t taxed, which is why its withdrawals are on the list. The TFSA calculator shows how large an account can get.
Is an inheritance taxed in Canada?
The CRA lists most inheritances as not reported or taxed, so you don’t put one on your return. Picture Dana, whose aunt leaves her $50,000. Dana doesn’t report it, and her tax for the year is the same as it would have been without it.
That doesn’t mean nothing is charged on the estate itself. Provinces can charge a fee to probate a will, and Ontario’s is called the estate administration tax. The estate administration tax calculator works it out, and it’s paid from the estate, not from your pocket.
Anything you inherit and then sell, or rent out, can start producing income or a gain of its own. The capital gains tax calculator is the place to check a sale.
Do benefits count as income?
People often ask whether government cheques count as income. The child benefit and the grocery benefit in the table don’t. Still, you apply for them through your tax return, so a filed return matters even when none of the money is taxed.
Non taxable doesn’t always mean unrelated to your income. Check the CRA benefit pages to see what each payment is based on, and use the Canada child benefit calculator for an estimate.
The CRA’s short list also leaves things off. An RRSP withdrawal isn’t on it, so don’t assume it’s free money. The RRSP withdrawal tax calculator shows what comes out of one.
What about a prize or gift from work?
This is where the plain rule gets muddy. The CRA’s lottery line has a catch: a prize that counts as income from work, a business or property, or a prize for achievement isn’t covered. So a draw prize from your employer’s holiday party or a contest tied to your sales numbers needs a closer look than a ticket from the corner store.
Gifts from an employer are their own topic. The CRA has separate payroll pages on gifts and awards from employers, so money from a boss isn’t covered by the family gift rule. We haven’t checked those rules here.
What mistakes cost money?
Easy to get wrong. Treating a prize as a lottery win. A prize for achievement, or one tied to your job or business, can be taxable.
Forgetting the interest. A windfall sitting in a savings account quietly creates taxable income every month, and it’s on you to report it. Even a few bucks of interest goes on the return.
Skipping the return. Even when none of your money is taxable, a filed return is how you apply for the benefits above.
Where the numbers come from
The list and its conditions come from the Canada Revenue Agency page “Amounts that are not reported or taxed”. Dollar examples are our own calculations using 2026 federal and Ontario rates. This site isn’t linked to the CRA or any government.
Frequently asked questions
Are lottery winnings taxable in Canada?
Not in any amount, per the CRA, unless the prize is income from employment, a business or property, or a prize for achievement. Interest you earn on the winnings is taxable.
Do I pay tax on a gift or inheritance?
Most gifts and inheritances are not reported or taxed. Income they later earn for you, such as interest, is taxable.
Is the Canada child benefit taxable?
No. The CRA lists it as not reported or taxed, along with the Canada Groceries and Essentials Benefit.
Are TFSA withdrawals taxable?
Most amounts received from a TFSA are not reported or taxed.
Does non taxable income affect my benefits?
Not as tax, but benefits can depend on your return. Check each benefit's CRA page for how it is calculated.
- How Canadian income tax works: brackets and credits
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